Vaughan v Vaughan [2007] EWCA Civ 1085

[2007] EWCA Civ 1085Case No B4/2007/0864
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE OXFORD COUNTY COURT
H.H. JUDGE CORRIE
LOWER COURT NO: OX06D00101
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 02/11/2007
Before
LORD JUSTICE WARDLORD JUSTICE MUMMERYLORD JUSTICE WILSON
Between
PHILIP HOWELL VAUGHANAppellantLUCIENNE ELIZABETH VAUGHANRespondent
The Appellant “husband” appeared in person. for in personMiss A. Ward (instructed by Wilsons, Salisbury) appeared for Respondent “wife”.Hearing Hearing date: 9 August 2007.
Judgment

SECTION A: INTRODUCTION

[1]A “husband”, as it will be convenient to describe him notwithstanding the pronouncement of a decree absolute of divorce, appeals against an order made in proceedings for ancillary relief by H.H. Judge Corrie in the Oxford County Court on 5 April 2007. The circuit judge’s order was made on appeals by the “wife”, as it will be convenient to describe her, and by the husband against an order for ancillary relief made in favour of the wife by District Judge Jenkins on 17 October 2006.[2]The central part of the district judge’s order, which provided for a clean break between the parties, was that the matrimonial home in Henley, occupied then as now by the wife, should be sold and that, out of the net proceeds, sums first of £425,000 should be paid to the wife and then of £160,000 should be paid to the husband and that any excess above £585,000 should be divided equally between them. The central part of the circuit judge’s order was that the first £50,000 of any such excess should be paid to the wife. In that even under the district judge’s order the wife would have received half of any such £50,000, the effect of the circuit judge’s order was to increase the award to the wife by £25,000.[3]The husband, who appears in this court in person as he did before the circuit judge (albeit not also before the district judge), contends that the circuit judge was wrong to increase the award to the wife and that, on the contrary, he should have reduced it. The wife, who has at all stages been represented by Miss Ward, responds that in the circumstances the circuit judge was entitled to interfere with the district judge’s order and that the exercise of his resultant discretion so as to increase the award by £25,000 was legitimate.[4]The case has been bedevilled by three features.[5]First, the district judge was furnished with what now seems to have been a gross undervaluation of the home by the jointly instructed valuer.[6]Second, there has been – and still is – great uncertainty about the husband’s future employment prospects, whether with his current employers, namely British Airways, or otherwise. He has been employed by B.A. as a pilot, with the rank of captain; but in 2005, when the marriage broke down, he suffered a serious depressive illness which caused him to be suspended from duties until very recently. The evidence before the district judge clearly suggested that B.A. was about to terminate his employment and thus the financial terms of the severance appeared to be of great relevance. By the time of the hearing before the circuit judge, however, it was far from clear that the husband would be required to leave B.A. and thus his substantial salary as a pilot appeared perhaps to be again at his command in the future. The husband tells us that in June 2007, shortly after the hearing before the circuit judge, he physically returned to work for B.A., albeit, whether indefinitely or otherwise, assigned to ground duties.[7]Third, it has to be said, after making every allowance for his illness, that the husband has been guilty of serious financial and forensic misbehaviour during the past two years. His hostility towards the wife, which may be reciprocated, is of sickening intensity. He has not only recklessly dissipated assets but has brought numerous interlocutory applications or appeals in the county court, mostly devoid of merit, and has failed to discharge his duty of disclosure. This leads Miss Ward to submit to us that the district judge and the circuit judge, exposed to a series of forensic manoeuvres on the part of the husband in which he has usually acted in person, have gained his measure and, by contrast, that we have lacked the opportunity to do so. We have a transcript of the exchanges between the husband and the circuit judge during and after the latter’s judgment; it is clear both that the husband then behaved disruptively and that the judge addressed the behaviour with a perfect mixture of firmness and politeness. Nevertheless, insofar as the two judges were unable to do other than to approach their task in the knowledge that the husband was a troublesome litigant, prone not to cooperate with the court and to raise meretricious points, such would seem to me to be as much a handicap as an advantage. It is at any rate my personal experience that a litigant’s repeated making of bad points, particularly if clothed with aggression or infected with dishonesty, may eventually become so exasperating to a judge that the latter becomes at risk of failing to identify any good point which he may subsequently make.[8]In the end, as I will explain, the case demonstrates that, in an ancillary relief appeal, even the most conscientious appellate judge can fall into error if, having perceived error and/or received fresh evidence, he purports to make the requisite adjustments without having first stood back and, in the light of all the circumstances including the adjustments, surveyed the effect of the order under appeal. It is sometimes easy to think that an appeal is from a judgment. But it is not; it is from an order. A judgment may have contained an error; and a change of circumstances may have invalidated some of its important assumptions. But it does not follow that the order should be set aside upon appellate review.

SECTION B: THE BACKGROUND FACTS

[9]The husband is now aged 47 and the wife is now aged 46. They were married in May 1987. An unusual feature, and, in the husband’s submission, an important one not properly reflected in the reasoning of either of the judges, is that he had bought the matrimonial home in his sole name, free of mortgage, three years prior to the marriage with an inheritance from his father. Towards the end of the marriage he placed it into the parties’ joint names.[10]There are two children of the marriage, namely Sophie who is now aged 19 and Jonathan who is now aged 18. Both of them are presently estranged from the husband. Sophie has just completed an arts foundation course at a college in London and is likely to pursue a degree course in London. Jonathan has just left school and may proceed to university after a year’s gap. At the time of the hearing before the district judge Jonathan was not quite 18 years old; and this led the district judge, in the course of a well-presented judgment, to describe Jonathan as the only “relevant” child. Such was a piece of shorthand which I myself would not have used: for although, by virtue of s.25(1) of the Matrimonial Causes Act 1973, Jonathan’s welfare for the months until the attainment of his majority was, and by contrast Sophie’s welfare was not, the court’s first consideration, it by no means follows that the interests of adult children undergoing further education are irrelevant to enquiries of this sort. Indeed such was recognised by the district judge in his conclusion that it would be reasonable for the wife to buy a house with three bedrooms in West London which during the next few years the children might use as a base even if they were unlikely to live there full-time.

SECTION C: THE FINDINGS AND CONCLUSIONS OF THE DISTRICT JUDGE

[11]Before the district judge was a valuation of the matrimonial home by a jointly instructed valuer dated May 2006 in the sum of £600,000. The wife submitted to the district judge that the figure might prove too low and explained that, suspiciously, the valuer had failed to answer her solicitors’ questions about his valuation; and the district judge observed that, in the light of his knowledge of local property prices, his gut feeling was that indeed the valuation was too low. As I will demonstrate in [29] below, his observation was entirely justified. There is no point in speculating why the valuation was so unfortunately erroneous; and although the husband’s mother had been expressing a wish to buy the house for the husband’s occupation and for the ultimate benefit of the two children, being an expression of wish which at a recent further hearing the district judge has held not to be – or at least no longer to be – bona fide, there is no evidence that the valuer was in any way induced by the husband’s family to provide a low valuation.[12]The district judge found that the wife had net liquid assets of £54,000. He also found that the husband had no liquid assets. The husband’s apparent lack of such assets was the subject of considerable argument. It was the wife’s case that during the 18 months since separation he had been in possession of liquid capital and income amounting to £196,000. She conceded that a small proportion of it, say £24,000, had reasonably been spent but demanded to know what had happened to the balance of say £172,000. Her case was that the husband had either hidden it or recklessly dissipated it and that in either event it should be attributed to him as part of his capital. Having heard his oral evidence, the district judge rejected the suggestion that the husband had hidden any of it; and this conclusion was not the subject of attempted challenge in the wife’s appeal to the circuit judge.[13]But the district judge’s treatment of the wife’s alternative case was more controversial. For, in defending himself against the suggestion that he had hidden it, the husband had been driven to accept that he had spent large sums of money (for example six withdrawals of cash totalling about £80,000 in about October 2005) by gambling or other improvidence. The district judge found that in that regard the husband’s conduct had been “bizarre and inexplicable and, objectively, profoundly irresponsible” but that it had been largely attributable to his illness and that no moral culpability attached to it. The wife submitted that, irrespective of moral culpability, she should not be prejudiced by profoundly irresponsible expenditure on the part of the husband and that therefore the sum thus expended should be re-attributed to him. Having observed that “there are, apparently, no legal principles to be applied, nor any guidance from the Court of Appeal as to how [he] might approach [it]”, the district judge rejected the wife’s submission.[14]Such was a rare legal error on the part of the district judge. Miss Ward tells us that it was curious that he should refer to an absence of legal principles in that she and counsel for the husband had referred him to a recent example of such re-attribution, namely Norris v. Norris [2003] 1 FLR 1142. Although such was a decision at first instance, it is the last in a line of authority which stretches back to the decision of this court in Martin v. Martin [1976] Fam. 335 that, in the words of Cairns LJ at 342H, “a spouse cannot be allowed to fritter away the assets by extravagant living or reckless speculation and then to claim as great a share of what was left as he would have been entitled to if he had behaved reasonably.” The only obvious caveats are that a notional re-attribution has to be conducted very cautiously, by reference only to clear evidence of dissipation (in which there is a wanton element) and that the fiction does not extend to treatment of the sums re-attributed to a spouse as cash which he can deploy in meeting his needs, for example in the purchase of accommodation. At all events the district judge’s failure to despatch the issue by reference to the relevant legal principle in my view conferred upon the circuit judge an entitlement, at any rate in principle, to despatch it differently.[15]The wife has been working part-time for B.A. at Heathrow airport since 1995 and, by the time of the hearing before the district judge, was earning £12,000 p.a. gross. There was considerable debate about her capacity to work full-time and in particular about her then likely salary. The district judge’s finding was that by no earlier than April 2008 the wife could probably move to full-time employment, from which she would earn up to £26,000 p.a. gross, perhaps up to the age of 60; and this finding was not the subject of challenge before the circuit judge.[16]The husband’s nervous collapse and suspension from duties at B.A. occurred in about July 2005 and was soon followed by the loss of his Civil Aviation Authority pilot’s licence. Until January 2006 he continued to receive his basic captain’s salary, namely £80,000 p.a. gross. Thereafter until the time of the hearing before the district judge in October 2006 he received £3000 per month under a B.A. sickness scheme. It was the husband’s case before the district judge that he would never be fit to resume flying and that in February 2007 B.A. would be likely to dismiss him, whether on grounds of ill-health (in which case he would probably receive substantial benefits under the B.A. sickness scheme) or otherwise (in which case he might have statutory claims against B.A.). In the event the issue as to his fitness to fly seemed to be clearly resolved for the district judge by an up to date report on him by Dr Wilkins, a consultant psychiatrist instructed to assess him only for the purpose of the proceedings. He concluded that the husband was still suffering a depressive illness of moderate severity, with significant perpetuating factors primarily related to his personality. Dr Wilkins wrote:
“… the prospect of his return to paid employment in the near future is limited. His job is as a commercial pilot and I cannot conceive of a situation where he would be fit for flying. For instance, I certainly wouldn’t want him flying me anywhere. In my opinion, in fact, I would regard him as being a significant danger as a pilot not because of his potential for deliberately crashing a plane, but because of his poor concentration, his preoccupation with his difficulties and his simple attitude towards his overall difficulties. In my opinion, he is simply not fit to fly in any capacity whatsoever.”
[17]In the light in particular of that evidence, the district judge concluded not only that B.A. would terminate the husband’s employment in February 2007 but that they would do so on grounds of ill-health. The district judge found that the substantial benefits which, though discretionary, would probably flow from termination on such grounds were a lump sum of £164,000, payable forthwith by way of compensation for loss of pilot’s licence, and a pension of £19,000 p.a. gross, payable with immediate effect. The district judge also found that the husband would recover sufficiently to have “an earning capacity of sorts” in other spheres, albeit perhaps limited to menial work.[18]The district judge found that the capital values of the ordinary pension rights of each party in the B.A. pension scheme were £15,000 in the case of the wife and £159,000 in the case of the husband.[19]In his substantive judgment the district judge did not address the incidence of costs. It appears, very broadly, that at that stage the wife’s costs were £54,000, of which she had paid £18,000 so still owed £36,000, and the husband’s costs were £58,000, of which he had paid £36,000 so still owed £22,000.[20]I need not rehearse the extensive debate before the district judge as to the reasonable cost of a home for each party. His findings were that it would be reasonable for the wife to buy a three bedroom property in West London, within reach of Heathrow, at a cost of between £400,000 and £425,000 or, inclusive of collateral costs, of £450,000; and for the husband to buy accommodation at a cost of £250,000 or, inclusive of such costs, of £275,000. The circuit judge declined to depart from these figures and it is not suggested to us that he should have done so.[21]In [2] above I have set out the kernel of the district judge’s award, namely, out of the allegedly probable net proceeds of the home, payment of £425,000 to the wife and of £160,000 to the husband, with an equal division of any excess. The district judge explained why such a distribution served the need of each party for a home. Although he reasonably found that the wife had no capacity to raise and service a mortgage, he explained that, in the light also of her liquid capital of £54,000, the award of £425,000 to the wife would provide her with the £450,000 which she needed. And – importantly – he explained that, in the light also of the apparently imminent receipt by the husband of the lump sum of £164,000 out of the B.A. sickness scheme, the award of £160,000 to the husband would provide him with the £275,000 which he needed. In that the wife’s claim for ancillary relief had been made prior to 3 April 2006 and so was not subject to the new rule in relation to costs contained in Rule 2.71 of the Family Proceedings Rules 1991, the district judge excluded from the calculations in his substantive judgment the liabilities of the parties in respect of costs.[22]Within the clean break provisions the district judge also included a pension sharing order in favour of the wife. In that she was claiming the lion’s share of the free capital, the wife limited her claim to 25% of the value of the husband’s pension rights; and, on the basis both that she was indeed to be awarded the lion’s share, albeit less than she claimed, and that she had the opportunity in the future to augment the value of the pension referable to her own earnings, the district judge limited his award to 20% of the value of the husband’s rights, namely rights to a value of £32,000. The appeals to the circuit judge included no challenge in this regard.[23]Following judgment the district judge heard argument on costs and ordered the husband to pay £15,000 towards the wife’s costs, inclusive of previous such orders against him.[24]At the end of his substantive judgment the district judge had observed that his award to the wife was of 60% of the capital. Miss Ward agrees with me that his calculations must have been as follows: W H Total £000 Proceeds of home 425 160 585 B.A. lump sum Nil 164 164 Liquid capital 54 Nil 54 Total 479 (60%) 324 (40%) 803 (100%)[25]It seems therefore that in his calculations the district judge did not include the capital value of the parties’ pension rights, as adjusted by the proposed pension sharing order. I readily acknowledge the difference in kind between disposable capital and the capital value of pension rights. Nevertheless the latter is often a very significant component of the future economy of each or both of the parties; unlike any attempted capitalisation of earning capacity, it does not depend on the application of future effort but, subject only to market and other vagaries, is in the bag; and its size has usually been increased by the efforts, direct and indirect, of both parties during the marriage. So in my view the convenient practice, which respects the difference in kind to which I have referred, is that, underneath the total value of other capital, the balance sheet should present the capital value of pension rights and then arrive at a grand total. Had the district judge favoured such a presentation, his calculations would have been as follows: W H Total £000 Total 479 324 803 H’s pension rights 32 127 159 W’s pension rights 15 Nil 15 Grand Total 526 (54%) 451 (46%) 977 (100%)[26]Indeed the effect on the above of the order for costs made by the district judge was as follows: W H Total £000 Grand Total 526 451 977 W’s outstanding costs (21) (15) (36) H’s outstanding costs Nil (22) (22) Net of Costs 505 (55%) 414 (45%) 919 (100%)

SECTION D: THE FINDINGS AND CONCLUSIONS OF THE CIRCUIT JUDGE

[27]The circuit judge recorded that neither party had invited him, pursuant to Rule 8.1(3)(a) of the Rules of 1991, to hold a rehearing rather than, conventionally, to conduct a review of the district judge’s order. He correctly decided, however, that, notwithstanding that the appeal was by way of review, he should exercise the power expressly given to him in such circumstances by Rule 8.1(3)(b) to admit further, up to date, evidence about two important matters, namely the value of the home and the husband’s position with B.A.. His task therefore was like that of this court when it admits fresh evidence, namely to review the decision below but in the light of the fresh evidence.[28]As I have indicated in [14] above, the circuit judge in my view correctly upheld the wife’s complaint about the district judge’s unprincipled treatment of what he had found to be the husband’s profoundly irresponsible expenditure. The circuit judge held:
“… the simple fact [is] that the husband dissipated, without any explanation that satisfied the district judge, sums of between £100,000 and £175,000 … [W]hatever the mitigation, and irrespective of the district judge’s finding that this was all part and parcel of his mental illness at the time, it remains a fact and it seems to me that the district judge was wrong in not reflecting that fact in some way.”
No doubt there are cases in which the mental incapacity of the dissipating spouse is such as to render re-attribution unfair; but I agree with the circuit judge that the husband’s problems were not of that severity. Unfortunately, however, the circuit judge omitted to survey, in terms of percentages of capital, the effect either of the district judge’s order in the light of the fresh evidence which he received or of his own proposed substitute order in that light; and the result of his omission was that he never found it necessary to identify the sum to be re-attributed to the husband by reason of dissipation. In that re-attribution has to be conducted very cautiously and in that, following more detailed argument than we have received, the circuit judge identified the parameters of the total sum dissipated by the husband as being between £100,000 and £175,000, I propose in my calculations to adopt the minimum figure.[29]The fresh evidence before the circuit judge about the value of the home was that two firms of estate agents had recently advised that it should be marketed for sale at an asking price of £895,000 and £850,000 respectively. Both sides agreed that it would fetch substantially more than the figure of £600,000 with which the district judge had been presented and of which indeed he had been suspicious: before the circuit judge, a likely sale price of £695,000 was suggested by the husband and of £895,000 was suggested by the wife. It was not as a result of fault on the part of the circuit judge that the two firms of estate agents had – apparently – not been asked the obvious question, namely, in lieu of their suggested asking prices, “What is the maximum price at which in your view the house is likely within a reasonable time to be able actually to be sold?” Again, however, the circuit judge’s disinclination to conduct any percentage calculations perhaps led him not to be as concerned about this lacuna in the fresh evidence as I would have been and, with respect, as in my view he should have been.[30]The fresh evidence before the circuit judge about the husband’s position with B.A. was even more surprising. The cross-appeals had been due to be heard by a circuit judge other than Judge Corrie on 14 February 2007. Two days prior to that intended hearing counsel then still instructed by the husband filed a skeleton argument to the effect, consistent with the evidence accepted by the district judge, that the husband remained unable to fly and that his career had been destroyed; but he also produced evidence that the apparently imminent termination of the husband’s contract of employment with B.A. would not be on grounds of ill-health and thus would be without the attendant benefits. In the event the circuit judge adjourned the hearing until 3 April 2007, to be conducted by Judge Corrie; and his reason for doing so was that the court should receive clarification from B.A. about the husband’s position.[31]Thereafter, namely one day prior to the hearing beginning on 3 April, B.A. produced to the wife’s solicitors copies of two reports on the husband by Dr Byrne, a consultant occupational physician attached to B.A. Health Services. They were dated 15 December 2006 and 23 February 2007 and, though addressed to a fleet manager at B.A., had been copied to the husband. The husband was furious with B.A. for having produced the reports to the wife’s solicitors. But he had no reason to be furious. It is clear that he should himself have disclosed them pursuant, if not to any specific order of the court, at least to his general duty to make full and frank disclosure; and in that, in the absence of the production by B.A. to the solicitors of all such reports, leave had been given for a witness summons to be issued against one of their officers to produce them to the court, B.A. had in effect been obliged to produce them.[32]In his report dated 15 December 2006 Dr Byrne, who had assessed the husband on the previous day and had spoken to his treating consultant, said:
“[The husband] will not be fit to return to flying duties by the 8 February 2007. I cannot predict with absolute confidence a return to flying before the 8 August 2007, but there is scope to re-evaluate his progress in early January. … If recovery continues, it will be advisable as part of a rehabilitation plan, for [the husband] in the Spring to trial A4 ground duties to prove his fitness to resume flying. … Given the guarded expectation of recovery, this case does not currently satisfy the criteria for an ill-health pension.”
[33]In his report dated 23 February 2007 Dr Byrne, who had re-assessed the husband, said:
“After a 19 month absence with a medical condition, that is protected by the [Disability Discrimination Act], there is now emerging evidence of substantial improvement. His recovery is not yet complete and the main risk to the rehabilitation plan is a setback, although this is considered unlikely providing his legal difficulties conclude as hoped. There is now a realistic prospect of a return to flying duties before the 8th August 2007. This view is supported by both his Consultant and the [Civil Aviation Authority] and welcomed by the pilot. [The husband] is fully aware that CAA recertification depends entirely upon a full unequivocal completion of his recovery and the need for satisfactory CAA assessment 2 months after stopping medication. I agree that the end of his divorce proceedings (now rescheduled for the 3rd April) should be enormously beneficial as it is then planned to gradually discontinue his medication (over two months) under the supervision of his Consultant. If you proceed to terminate on the 7th March, [the husband] does not meet the criteria for an ill-health pension as his health has substantially improved and there is every prospect of a full recovery and recertification by August 2007. The CAA, following discussion, have not made him long term unfit. … [A]t some future stage a brief trial of ground duties prior to restoration of his licence would be advisable in order to reintegrate to work and help the relicencing process. A trial is not currently considered appropriate while still on treatment and given the small degree of vulnerability surrounding the finality of court proceedings.”
[34]On the face of them Dr Byrne’s reports transformed the picture which had been painted about the husband’s likely future with B.A.. They were wholly inconsistent both with the assessment of him by Dr Wilkins, adopted by the district judge, and with the assertion of the husband’s then counsel on 12 February 2007, he being no doubt unaware of Dr Byrne’s report dated 15 December 2006, that the husband’s flying career had been destroyed. But how optimistic a prognosis was the circuit judge to derive from Dr Byrne’s reports? He was rightly cautious. He declined Miss Ward’s invitation to find that it was “probable” that the husband would resume his flying career. He found that, in Dr Byrne’s words, such was a “realistic prospect”, which he construed as only a “strong possibility” and something short of a probability. So an important part of the husband’s future financial position remained in a state of considerable uncertainty; and no doubt that made things difficult for the circuit judge.[35]On what grounds did the circuit judge decide to increase the award to the wife by £25,000? He did so by reference to three areas in which he felt obliged to depart from the findings of the district judge, namely(a) the district judge’s failure to re-attribute to the husband any of the money which he had dissipated;(b) the fresh evidence about the increase, albeit unspecified, in the value of the home; and(c) the fresh evidence about the husband’s future with B.A. “Taking those three factors together,” said the circuit judge, “I have to ask myself whether there should be some adjustment to reflect the loss of the chance, quite a substantial chance, of future maintenance, in return for the clean break which is not contested, and the fact that the wife has been deprived of the opportunity of benefiting from the money so extravagantly and inexplicably spent in such a short period by the husband while he was ill.” In relation to the loss of the chance of future maintenance, the judge observed that, if the realistic prospect of the husband’s return to flying at a salary of £80,000 to £100,000 p.a. were to materialise, the wife, if earning only £26,000 p.a., would have had a significant entitlement.[36]Largely by reference to an open letter in which the wife, by her solicitors, had proposed to the husband, by his then solicitors, that both appeals to the circuit judge should be withdrawn with no order as to costs, the circuit judge decided to order the husband to make a contribution of £12,000 towards the wife’s costs of the appeals, the total of which was estimated at £16,000.

SECTION E: THE FURTHER EVIDENCE BEFORE THIS COURT

[37]Since the hearing before the circuit judge the home has been actively marketed for sale at an asking price of £895,000. As a result of the husband’s misconduct the marketing has been difficult. At an interlocutory hearing on 15 May 2007 District Judge Jenkins rejected the husband’s assertion that the wife was impeding the sale and upheld the wife’s assertion that the husband was impeding it. The husband abandoned an appeal against the directions given by the district judge on that day; and so we must take his findings to be valid. The primary direction then given by the district judge was that an offer which had been made to purchase the home for £880,000 should be accepted and that, if such sale fell through, the wife should be entitled to accept any other offer which she considered to be reasonable. The offer of £880,000 was duly accepted; but the proposed purchaser withdrew. More recently an offer of £870,000 was accepted; but, again, the proposed purchaser has withdrawn. The circumstances in which the two sales have fallen through are not thought to indicate that such prices were too high and cannot again be achieved. Indeed the husband tells us that the estate agents express confidence that they can achieve the asking price. But I consider it safer that we should proceed by reference to a price of £870,000 or, net of costs of sale at 3%, of £843,000.[38]Since the hearing before the circuit judge there has been the further development in relation to the husband’s employment with B.A. to which I have referred in [6] above. For he tells us that in June 2007, after four months in which his suspension from duties had continued without pay, B.A. assigned him to full-time ground duties in the Flight Training Commercial Sales department. What significance should we attach to this development? Miss Ward understandably submits that the ground duties represent the short stepping-stone to the resumption of the husband’s work as a pilot to which Dr Byrne referred in the report quoted at [33] above; and thus that what for the circuit judge was a realistic prospect of such a resumption has now become a probability. Her submissions may well be valid but another possible, less optimistic, hypothesis is that B.A. are in a substantial quandary as to how to disengage themselves from the husband with minimal financial exposure. In my view the chance of a resumption of his flying career may now be expressed in terms only somewhat stronger than when assessed as a “realistic prospect” by the circuit judge, perhaps now as a probability albeit a weak one; but the chance of his continued employment by B.A. in one capacity or another is more strongly probable, albeit by no means certain.[39]We have not asked the husband how much he is now earning. My own vote in favour of our decision not to do so was cast for three reasons. First, the putting of questions by this court out of the blue at a hearing is an unsatisfactory way for it to receive further evidence even in the rare case in which such evidence is in principle fit for receipt. Second, while his integrity is no doubt very high in other spheres of life, the husband’s conduct of these proceedings has been so warped by anger that his credibility in them stands low. Third, his assignment to ground duties is so recent that his current earnings may be no guide to their future level, even if his employment with B.A. is to continue. So it has been left to Miss Ward to suggest that it is likely that the husband is now again in receipt of a captain’s basic salary of £80,000 p.a.; and to the husband to respond, possibly with a careful choice of words, that grounded captains do not continue to receive a captain’s salary ad infinitum.

SECTION F: ARGUMENTS AND CONCLUSION

[40]A central plank in the reasoning behind the district judge’s conclusion that his proposed redistribution of capital would enable not only the wife but also the husband to purchase reasonable accommodation had been that, upon the apparently imminent termination of his employment with B.A., the husband would receive a lump sum of £164,000. Once the circuit judge concluded that there was a realistic prospect of a resumption of the husband’s career with B.A. as a pilot, the plank became hazardous. In two passages of his judgment the circuit judge addressed the very possible loss of the £164,000. He said:
“That will not be paid if he goes back to flying, but if he goes back to flying he would be very much better off.”
Later he said:
“If he resumes flying duties, he will have a very substantial mortgage capacity … or …, if it all goes wrong and he cannot fly again …, he will get … £164,000 … So he is able either way to house himself and in the more fortunate alternative at a rather better level than allowed for by the district judge.”
[41]A third possibility, expressly canvassed by counsel then appearing for the husband in his skeleton argument prepared for the abortive hearing of the appeals in February 2007, was that B.A. would dismiss the husband otherwise than on grounds of ill-health, in which case the lump sum of £164,000 would not be paid and the husband would be left to pursue any statutory claims against B.A., such being of possibly significant but at any rate uncertain value. But, putting that possibility aside, it seems to me that, in the search for a fair redistribution of capital following divorce, it will often be an insufficient answer to the possible evaporation of a spouse’s entitlement to £164,000 to say that, in lieu, he would then have a mortgage-raising capacity in at least that sum. Such an answer might well be relevant to the enquiry required by the principle of need but not to that required by the principle of sharing, to the extent that such is not overridden by the principle of need.[42]Thereupon, as I have shown, the circuit judge proceeded to discern a further relevance in the realistic prospect of the husband’s resumption of a substantial income. Its further relevance was, in the circuit judge’s view, that it raised the spectre of a “significant but not probable” entitlement on the part of the wife to periodical payments which, by the clean break, she was foregoing and for the loss of which she should to some extent be compensated. As will become clear, I am far from saying that this was an irrelevant feature. But, in the words of the circuit judge, it related – on the evidence before him – only to “the loss of a significant chance” and so it was inherently speculative. Nor did the circuit judge remind himself that he had already impressed the husband’s possibly substantial income with the notional burden of servicing a substantial mortgage, being a burden not analogously cast upon the wife, with the result that the relevant disparity of income would not be as great as would at first appear. I should add that, in seeking to defend this part of the circuit judge’s reasoning, Miss Ward gives us a calculation, again which makes no allowance for the husband’s unmatched mortgage, of the amount of periodical payments which would have brought the wife’s notional income up to one half of the joint notional incomes. But she concedes that she can cite no authority for that approach to quantification, for which I know of no foundation, even in principle.[43]In what way should the circuit judge have approached the appeals before him? In his reasoning the district judge had made one, discrete, error of principle, namely to fail to re-attribute to the husband the sum of £100,000 which he had dissipated. Such an error alone conferred on the circuit judge an entitlement to interfere with the district judge’s discretionary conclusions. The fresh evidence also so entitled him. The threshold to an entitlement to interfere, famously described in G v. G (Minors: Custody Appeal) [1985] 1 WLR 647 at 652E-G, was crossed. The discretion fell to be exercised afresh by the circuit judge. How should he have set about the task of exercising it? There were two possibilities. The first would be for him in effect to have reached for a blank sheet and to have conducted the entire enquiry mandated by s.25 of the Matrimonial Causes Act 1973 de novo. The second would be for him, at least in the first instance, to have corrected the district judge’s error by re-attributing £100,000 to the husband, to have brought into account the effect of the fresh evidence, to have surveyed the effect of the district judge’s order in the light of such changes and to have asked himself in what way, if at all, the order needed to be varied in order to achieve the optimum result. Subject to a substantial caveat which I will enter in [44] below, the circuit judge seems basically to have favoured the second approach; and in my view he was fully entitled to do so. No doubt there are many situations in which the factors which entitle appellate interference with a discretionary decision are such as to make it impracticable to do other than to conduct an entirely fresh enquiry de novo. But in a case, such as this, in which such factors relate to specific features, indeed in effect to specific figures, I regard it as often convenient, as well as logical and proportionate, for the appellate court, in the course of its exercise of the discretion, first to assess the impact of the requisite changes upon the appropriateness of the lower court’s order. If the order nevertheless remains optimum, the requisite changes, the effect of which may, as perhaps here, be that they cancel each other out, can be seen, taken compendiously, to have no ultimate materiality.[44]In my view the deficiency of the exercise conducted by the circuit judge is that, although at least in principle he corrected the district judge’s error and although in broad terms he brought into account the effect of the fresh evidence, he never surveyed the effect of the district judge’s order in the light of such changes. Had he done so, the difficulties to which I have referred in [40] to [42] above would in my view have been visible to him. In my view the need for an effective survey required him, in terms of figures and percentages, to assess the comparative effect on the parties of the order for capital provision with which they were asking him to interfere. To the extent that uncertainties in the fresh evidence made that task difficult, he could have performed it on alternative hypotheses.[45]Indeed, as Lord Justice Ward has pointed out in the course of the argument, it was an express ground of the husband’s cross-appeal to the circuit judge that there was no reason to depart from what was then, prior to the decision of this court in Charman v. Charman (No 4) [2007] EWCA Civ 503, [2007] 1 FLR 1246, reasonably described as “the yardstick” of equality in the division of the proceeds of the home. The circuit judge recited that ground of appeal but never addressed it. Its proper address required him to attempt to discern the extent to which his proposed order departed from “the yardstick” of equality – albeit in the division not just of the proceeds of the home but of all the parties’ assets – and whether there was good reason for it to do so to that extent.[46]Our review of the circuit judge’s order therefore in my view requires us to exercise the discretion which he should have exercised, albeit in the light also of the further fresh evidence placed before us. By reason of my conclusions about the husband’s future with B.A. in [38] above, we should do our calculations without reference to the lump sum of £164,000 payable in the event of retirement on grounds of ill-health, while remembering that its receipt, albeit accompanied by substantial loss of income, remains an outside possibility. In the light of my comments in [43] above about the often convenient way of embarking upon the exercise of an appellate discretion in such a case as this, I reach for the district judge’s order, apply the current figures to it and suggest that its effect is demonstrated by the following calculation: W H Total First 585 of home proceeds 425 160 585 Balance of home proceeds 129 129 258 Liquid capital 54 Nil 54 Sum dissipated Nil 100 100 W’s outstanding costs (21) (15) (36) H’s outstanding costs Nil (22) (22) Total 587 (62%) 352 (37%) 939 (100%) H’s pension rights 32 127 159 W’s pension rights 15 Nil 15 Grand Total 634 (57%) 479 (43%) 1113 (100%)[47]In my view the above calculation makes clear that, notwithstanding correction of the district judge’s error of principle in relation to the sum dissipated by the husband and after making allowance for all the fresh evidence, there is no valid ground for a conclusion that the district judge’s award to the wife was in any way too low. Ignoring pension rights, we see that the effect of the district judge’s award was to yield £587,000 to her in circumstances in which he had quantified her housing need in the sum of £450,000. No doubt it was reasonable for the circuit judge to conclude that the housing need of the wife (and of the husband) had probably increased somewhat during the six months since the district judge’s order was made; and that her liquid capital of £54,000 had probably decreased somewhat (just as the husband, having received nothing from B.A. during the two months prior to the hearing, had surely moved into short-term debt). But, making full allowance for those two probable changes, the effect of the district judge’s order was to give the wife a sum substantially in excess of her need. Quite why the circuit judge cited the increase in value of the home as one of his three reasons for interference in her favour I do not understand: for we see that, on top of the substantially unequal division of the first £585,000 of the proceeds directed by the district judge, the increase in value provides her, even under the latter’s order, with a further £129,000. The effect of his order upon the wife then needs to be compared with that upon the husband. Ignoring pension rights, we might at first sight consider that the effect of the district judge’s award was to yield £352,000 to him for the service in particular of a housing need which the district judge had quantified at £275,000. But there we would fall into error; for the dissipated sum of £100,000 re-attributed to him is not available for service of his housing need. Thus the relevant yield to the husband under the district judge’s award is of £252,000 for the service of a need which in the interim would have climbed somewhat higher than £275,000. The conclusion is that, unless the minority chance of his retirement on grounds of ill-health were to materialise, the effect of the district judge’s order was already to require the husband to purchase his accommodation with the aid of a mortgage.[48]For the circuit judge in such circumstances to have transferred a further £25,000 from the husband to the wife (thereby incidentally changing the ratio of percentages on the bottom line from 57% - 43% to 59% - 41%) can be seen to have been substantially unfair to the husband and entirely unprincipled. In the light of his failure to have made the necessary calculation, the circuit judge’s decision to increase the award to the wife by that amount was a shot in the dark. His target was a fair result but, not surprisingly, he missed.[49]Arguably the more difficult question is whether the circuit judge should have acceded to the husband’s cross-appeal and reduced the level of the award to the wife. We can now see from the calculation in [46] above that the updated effect of the district judge’s order remains one of departure from the principle of equality. If adopted, it would result in an award to the wife 62% of the assets or (as I consider to be the more relevant percentage, at any rate when the court intends to impose a clean break with the result that neither spouse can later benefit from the other’s pension rights through periodical payments) 57% of the assets. Such would be the award notwithstanding that the home had been owned by the husband, free of mortgage, since well before the marriage and that, putting to one side his misconduct in dissipating assets following the breakdown of the marriage (the effect of which is intended to be rectified by the calculation), the contributions of each party to the welfare of the family during the marriage were in effect agreed to have been equal in value albeit not in kind. Although, in the words of Baroness Hale in Miller v. Miller, McFarlane v. McFarlane [2006] UKHL 24, [2006] 2 AC 618 at 663E, “the importance of the source of the assets will diminish over time”, I consider that the husband’s prior ownership of the home carried somewhat greater significance than either the district or circuit judge appears to have ascribed to it.[50]In the end, however, I have come to the conclusion that it would not have been appropriate for the circuit judge to reduce the district judge’s award to the wife. The order of the district judge does not infringe the sharing principle by imposing a division which, as we now see including by reference to updated figures, represents a departure from equality to 57% - 43% in favour of the wife. For there is good reason for it. An equality of division would just serve her need; so need could not afford any such good reason. In my view the good reason is the desirability, as always but particularly in this case, of a clean break. In my experience it is very difficult for the judge who strives for a clean break to discern the point at which he has reluctantly to accept that such is impracticable in that the minimum appropriate level of capital award on a clean break basis to the spouse with the likely lower income would represent too great a loss of capital for the spouse with the likely higher income. In my view, however, this is a case in which the clean break, for which, even when represented, the husband has actively contended, is just achievable, albeit only on the basis of a relatively modest departure from equality. The basis of the calculation in [46] above is, after all, that the husband will not only fail to become entitled to the lump sum of £164,000 but, as a probability if only a weak one, will also resume his flying career. On that basis there might well have been an entitlement on the part of the wife to fairly substantial periodical payments for some period; and in my view the departure from equality to the extent now visible in the calculation happens to represent as fair a quid pro quo as may reasonably be devised. Indeed we may now see that the effect of the calculation is to depart from equality in the sharing of assets in order to achieve greater equality in the overall outcome. No one should quarrel with that.[51]I would allow the husband’s appeal to this court; would set aside the circuit judge’s order; and would substitute for it an order that the appeal of the wife (in addition to that of the husband) against the order of the district judge should be dismissed.[52]I agree.[53]I also agree.

Cited in 47 later judgments

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